Government Issues SBC & Uniform Glossary Final Rule

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Jul 09, 2015

On June 16, the Departments of the Treasury, Labor and Health and Human Services (collectively, the Departments) released the Summary of Benefits and Coverage (SBC) and Uniform Glossary Final Rule for group health plans and health insurance coverage in the group and individual markets under the Affordable Care Act (ACA).

The Final Rule includes changes to the regulations covering SBC disclosure requirements for plans and individuals. There are no changes to the SBC template or instructions at this time. The Departments have indicated that a revised template and final revised instructions will be released no later than January 2016, and will apply for SBCs issued for plans new or renewing January 1, 2017; individual coverage, January 1, 2017. The SBC is a uniform document designed to help plans and consumers better understand their health coverage and compare coverage options.

Overview of the Final RegulationsThe Final Rule incorporated a number of previously issued guidance in the form of Frequently Asked Questions (FAQs) as well as adopted new standards. Among the changes, the Final Rule clarifies that if the issuer provides the SBC upon request before application for coverage, the requirement to provide the SBC upon application is satisfied provided there is no change to the information required to be in the SBC. Note, if the plan sponsor is negotiating coverage terms at the time of initial enrollment, an updated SBC reflecting the final coverage terms is required to be provided to the plan or its sponsor on the first day of coverage, or upon request if an updated SBC is requested.

Within the Final Rule, the Departments retained three existing special anti-duplication provisions from the 2012 final regulations and added two additional provisions to ensure participants and beneficiaries receive information while preventing unnecessary duplication. The additional anti-duplication provisions added to the Final Rule are:

If an entity required to provide an SBC has entered into a binding contract with another party to provide the SBC, the entity would be considered to satisfy the requirement to provide the SBC if specified conditions, including monitoring performance, are met. This provision is an adoption of a previously issued FAQ. A similar anti-duplication rule was added that applies to student health insurance coverage.

For a group health plan that uses two or more insurance products provided by separate issuers, the group health plan administrator is responsible for providing complete SBCs with respect to the plan. The group health plan administrator may contract with one of its issuers (or other service providers) to perform that function. Absent a contract to perform the function, an issuer has no obligation to provide coverage information for benefits that it does not insure. Additionally, it codifies the enforcement safe harbor that permits a group health plan administrator to synthesize the information into a single SBC or provide multiple partial SBCs that, together, provide all the relevant information to meet the SBC content requirements.

Enforcement relief applicable to insurance products that are no longer being offered for purchase (“closed blocks of business”).

Until the new template and associated documents are finalized and applicable, the agencies will not take enforcement action against a plan or issuer that provides an SBC with a cover letter or similar disclosure with the required minimum essential coverage and minimum value statements.

Specific to the individual market, the Final Rule states that if an issuer offering individual market insurance coverage automatically reenrolls an individual and any dependents into a different plan or product than the plan in which these individuals were previously enrolled, the issuer would be required to provide an SBC with respect to the coverage in which the individual (including every dependent) will be enrolled, consistent with the timing requirements that apply when the policy is renewed or reissued.

Furthermore, Qualified Health Plan (QHP) issuers must disclose on the SBC for QHPs sold through an individual market Exchange whether abortion services are covered or excluded, and whether coverage is limited to excepted abortion services.

The Final Rule also requires an Internet web address where a copy of the actual individual coverage policy or group certificate of coverage can be reviewed and obtained. This provision is applicable to issuers and not self-insured plans. The preamble to the Final Rule clarifies that for the group market only; an issuer is permitted to satisfy this requirement with respect to plan sponsors that are shopping for coverage by posting a sample group certificate of coverage for each applicable product. After the actual certificate of coverage is executed, it must be easily available to plan sponsors and participants and beneficiaries via an Internet web address.

The Final Rule specifies that the SBC cannot exceed four double-sided pages. The Departments will address specific issues related to completing the four-page template, as well as the problems plans and issuers encounter meeting these requirements with the finalization of the new template and associated documents, separate from this Final Rule.

Applicability Dates with respect to disclosures to participants and beneficiaries

The first day of the first open enrollment period that begins on or after September 1, 2015 for those who enroll or re-enroll in group health coverage through an open enrollment period (including re-enrollees and late enrollees).

The first day of the first plan year that begins on or after September 1, 2015 for those who enroll in group health coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees).

In the individual market, the requirements apply to health insurance issuers with respect to SBCs issued for coverage that begins on or after January 1, 2016.

Applicability Dates with respect to the new template and associated documentsThe Departments anticipate that the new template will be finalized by January 2016 and will apply to coverage that would renew or begin on the first day of the first plan year (or, in the individual market, policy year) that begins on or after January 1, 2017 (including open enrollment periods that occur in the Fall of 2016 for coverage beginning on or after January 1, 2017).